Thursday, January 5, 2017

Nothing Like A Hair Stylist Non-Compete Case

The details are slim from a recent article from the New York Post about a $3 million dollar non-compete/breach of contract case against a New York City hair stylist. What we know:

Stylist Annie Rush worked at the salon for 6 years;

Apparently she is alleged to have signed a 1 year non-compete (that is a guess based on the article);

The suit alleges Rush started handing out business cards a month before her departure from the salon;

Rush moved on to another salon and took all of her clients with her; and

Her former salon sued her for a lot of money and to keep her from working for a year.

The facts from this case aren’t all that different from the facts of most non-competes. Employer claims it spends a lot of money developing employee – employee leaves and takes customers with her – employer reacts with lawsuit to enforce non-compete. That said, the one fact I didn’t like was the allegation that Rush set up her move/transition by allegedly handing out new business cards for her new venture while still employed by the former employer. That’s bad news and great evidence if you are trying to enforce a non-compete or non-solicitation agreement.

Judges, like most people, are going to have some natural reaction and assign roles to litigants. What do I mean by that? Someone is going to be the good guy and someone is going to be the bad guy. It may be a close call, the judge or jury may be unsure, but in most cases someone will be good and someone bad. Better to be the good guy. We sometimes call that person the party with the “white hat”. (In the recent HBO series WestWorld, one of the key characters wears a white hat implying he is a good guy. Without spoiling the series, his role transitions over time along with the color of his hat.)

Assuming Rush decided to hand out business cards on the premises of her employer – pre-move that would be a major no-no. First, we’ll assume that action violates numerous provisions in her well-drafted employment agreement including a non-solicitation agreement and some species of a duty of loyalty provision. Second, it just looks bad. Most employment moves like these are premeditated, but an employee can do certain things to make the move “clean”. This includes not soliciting current customers to a new place of employment while you’re still employed by the employer who may sue you. Put another way, be smart. Don’t solicit customers while still employed, don’t take customer lists, and don’t take confidential/proprietary/trade secret information.